The primary reason that short-lived shocks can have long-run effects is
A) the nonneutrality of money.
B) misperceptions by the public over the actual price level and the expected price level.
C) the presence of rational expectations among the public.
D) the presence of propagation mechanisms.
D
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All else equal, an increase in supply will cause an increase in consumer surplus
a. True b. False Indicate whether the statement is true or false
Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift
a. demand, raising both the equilibrium price and quantity in the market for artificially-sweetened beverages. b. demand, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially-sweetened beverages. c. supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially-sweetened beverages. d. supply, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially-sweetened beverages.
When it comes to people's tastes, economists generally believe that
a. tastes are based on forces that are well within the realm of economics. b. tastes are based on historical and psychological forces that are beyond the realm of economics. c. tastes can only be studied through well-constructed, real-life models. d. because tastes do not directly affect demand, there is little need to explain people's tastes.
For the economy as a whole, how does income compare to expenditures? Explain